SBILIFE — earnings call

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Prepared remarks

Moderator · Conference Operator

Ladies and gentlemen, good day, and welcome to the SBI Life Insurance Company

Thank you.

We have the next question from the line of Shreya Shivani from CLSA.

Please go ahead.

Shreya Shivani

Thank you.

Sir, I have two questions.

First is on the growth outlook.

So in the first half on the individual APE, you've delivered 17% growth on a 21% base.

So sir, can you help us understand what is the outlook for second half and which will be the key products that could drive?

Where you're seeing better demand?

And will we be closing the full year on 20% growth guidance that you had spoken about in the last quarter?

My second question is on the number of policy growth.

So, for the first half, the number of individual policies is up 6%, while the individual APE growth, like I said, was 17%.

So, sir, can you help us understand what exactly, where is the ticket size growth?

And is there more potential for NOP growth going ahead?

These are my two questions.

Thank you.

Moderator · Conference Operator

Thank you.

The next question is from the line of Nischint Chawathe from Kotak Institutional Equities.

Please go ahead.

Nischint Chawathe

My question actually pertains to channel-wise business.

We have seen that agency has grown quite impressively this quarter.

And there is a fair bit of increase or almost doubling of business of ULIP business from the agency channel.

Now when you speak to some of your peers, their argument typically is that the persistency of agency may be somewhat lower than the bancassurance channel and which is the reason they would and ULIP being a product which is extremely sensitive to persistency, they would probably resist or pushing ULIPs through the agency channel.

And I think you've grown ULIPs pretty aggressively through agency.

So I was just trying to understand how are your persistency ratios in ULIPs versus banca?

And how comfortable are you with this kind of growth of ULIPs through agency?

Moderator · Conference Operator

Thank you.

The next question is from the line of Madhukar Ladha from Nuvama Wealth Management.

Please go ahead.

Madhukar Ladha

So, a couple of questions.

Number one, see market conditions are good and that helped you achieve a pretty good growth in Q2 and partly also offset the bad performance or the subpar performance in Q1. So, but market conditions now are not that good, right?

So, markets have become a lot more-shaky.

So, in that context, if ULIP does not do well and even the IRRs on some of the non-par products have come off given the interest rate curve has flattened quite a bit.

Would you see that as a challenge in the second half to growth, right?

So that's question number one.

Second, a very large growth has come also in your group APE, if I'm correct.

So in first half, the growth from group APE is pretty solid and a lot of it happened in Q2. So it will be important to just understand where is it coming from?

How much is sort of credit life and how much is GTI?

And if a lumpy GTI business has contributed to this?

And third, we've got some feedback that commissions for the agency channel have also gone up, in general commission rates have gone up.

So how are we reacting to the market condition?

And how has this sort of managed to get such a good growth in agency?

Yes, these would be a few of my questions.

Thank you.

Moderator · Conference Operator

Thank you.

The next question is from the line of Prayesh Jain from Motilal Oswal.

Please go ahead.

Prayesh Jain

Yes.

Hi, thank you for the opportunity.

Firstly, on the banca channel, particularly SBI, what would be the number of branches of SBI that would be selling SBI Life products today?

And how do you plan to increase this going ahead?

Moderator · Conference Operator

Thank you.

The next question is from the line of Dipanjan Ghosh from Citi.

Please go ahead.

Dipanjan Ghosh

Hi, sir.

Good evening, sir.

Few questions.

First, if I look at your non-par product and see the growth in non-banca and non-agency basically the other channels, that has been relatively robust on your non-par and protection growth.

So, could you give some color on what will be the channels and whether it's non-par or par that is growing in this channel?

And also, from a policy versus premium perspective, our ticket size perspective?

Second, in your other channels if you can give some color on what the mix would be of non-SBI banca?

And how the growth has been shaping up and if you're planning on adding a few more banca tie-ups that may be there in the pipeline?

Lastly, in your last quarter, you had highlighted that you are taking certain strategic steps to improve productivity at agency, we see some granular data during the quarter, but if you can give some more granular information on how agency is shaping up from both near and from a medium-term perspective out there?

Moderator · Conference Operator

Thank you.

The next question is from the line of Supratim Datta from Ambit Capital.

Please go ahead.

Supratim Datta

Thank you, sir.

Thank you for the opportunity.

I had three questions.

Starting with the first one.

Now if I look at your commission to premium ratio and compare second quarter FY '24 with last year, there seems to be a 60-basis point impact in your commission to gross premiums.

But when I look at the product mix, the ULIP, which has typically had lower commissions, that has increased.

So how should I think about this?

Why has the SBI Life Insurance Company Limited October 27, 2023 commission into gross premium ratio increased?

That's one.

Number two is on the individual protection, that has declined in the second quarter, just reasons why that has been the case because your peers are seeing growth in that category?

And lastly, on the agency, you one of the key drivers for your agency growth has also been agent additions last year, on a gross basis, you added around 75,000 agents.

This year, you have added till date around 50,000 agents.

So how should we think about agent addition going forward?

Can this pace continue?

And what has been driving this significant agent addition because previously, you were not adding agents at this rate?

So, if you could help me with these three questions that would be very helpful.

Moderator · Conference Operator

Thank you.

The next question is from the line of Mahek from Emkay Global.

Please go ahead.

Mahek

So, I have a couple of questions.

So first one would be, sir, if we look at the margin trajectory, it will be dependent on the product mix, operating expenses and external factors such as interest rates.

So now looking at the possible product mix, including some uptick in the credit life and non-par saving products.

How do you see the margin panning out for the rest of the year?

That would be the first one.

The second one would be, I mean, the other channels have been doing well.

So, can you help us understand what's going on there?

That would be the two questions from my side.

Moderator · Conference Operator

Thank you.

The next question is from the line of Neeraj Toshniwal from UBS India.

Please go ahead.

The line for the current participant seems to have disconnected.

We will proceed with the next question, which is from the line of Raj Saya from Agam Capital.

Please go ahead.

SBI Life Insurance Company Limited October 27, 2023

Raj Saya

Just wanted to understand on the SBI Bank channel.

Just wanted to know is there any threat of new participants or partners in that channel like we are seeing in other banks in terms in the context of the open architecture?

Do you see any threat there?

Moderator · Conference Operator

Thank you.

The next question is from the line of Prashant Kothari from Pictet.

Please go ahead.

SBI Life Insurance Company Limited October 27, 2023

Prashant Kothari

Okay.

Yes.

I'd just like to understand in the last earnings call, this was asked about the kind of new guidelines by IRDA on commissions.

And you mentioned that you'll be coming up with some new policy regarding that, any kind of update on that?

And any kind of conversations going on with SBI on any potential kind of change in the commission structures?

Moderator · Conference Operator

Thank you.

The next question is from the line of Vivek Khanjode from Aditya Birla Sun Life Insurance.

Please go ahead.

Vivek Khanjode

Sir, the first question is on credit life.

So, I wanted to understand the portfolio mix for the credit life new business premium, how much of it -- the percentage of it coming from the captive SBI Bank and the other partners?

The second question is on the GTL front, where the group GTL has shown high growth.

Is this because of the strategic any strategic calls that have been taken recently or is it because of some other reasons?

And the third question is on the group annuity front.

So, what is the percentage in terms of group fund, what is the percentage of annuity that has been contributed for the new business premium?

Moderator · Conference Operator

Thank you.

The next question is from the line of Roshan Chutkey from ICICI Prudential Mutual Fund.

Please go ahead.

Roshan Chutkey

Essentially wanted to understand how should one think about the increase in surrender ratio that you are seeing for the last two quarters?

Moderator · Conference Operator

Thank you.

The next question is from the line of Mohit from BoB Capital.

Please go ahead.

Mohit

Yes.

A couple of questions.

So, if I look at the rewards within your policyholder account, we see that there is a substantial jump even sequentially and annually.

So wanted to understand why the rewards have increased so significantly?

Moderator · Conference Operator

Thank you.

The next question is from the line of Shreya Shivani from CLSA.

Please go ahead.

Shreya Shivani

Sir, I just had one question on the non-par savings product, the Smart Platina Plus.

So in the industry, what has been seen in the past six months, everybody has taken a cut on their IRRs.

Sir, if you can help us understand how many rounds or if any rounds of cuts that you have on the IRRs that you were offering on your non-guaranteed product?

Moderator · Conference Operator

Thank you.

Ladies and gentlemen, we will take that as our last question.

I would now like to hand the conference over to Mr. Amit Jhingran, MD and CEO, for his closing comments.

Over to you, sir.

Thank you.

On behalf of SBI Life Insurance Company Limited, that concludes this conference.

Thank you all for joining us.

You may now disconnect your lines.

Safe harbour

Please note that this transcript has been slightly edited for the purpose of clarity.

Except for the historical information contained herein, statements in this release which contain words or phrases such as 'will', 'would', ‘indicating’, ‘expected to’ etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'.

These statements by the Company and its management are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions and are not guarantees of future performance.

Because forward- looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control, and actual results could differ materially from those presented in the forward-looking statements.

Questions and answers

SBI Life Insurance Company Limited

Moderator · Conference Operator

Thank you very much.

We will now begin the question-and-answer session.

The first question is from the line of Swarnabha Mukherjee from B&K Securities.

Swarnabha Mukherjee

I guess my first question is on the VoNB margins.

So just wanted to understand that if I look at the margins say from first quarter vis-a-vis that from the second quarter, you see that the product mix now has a fairly large share of ULIP compared to what it was last quarter.

Despite that, I think the margins have remained steady, of course, group protection has gone up also a bit.

So just wanted to understand that is group protection the only offsetting component for the increase in ULIPs?

Or are there other factors, say maybe some cost element that is there or some kind of assumption changes which is helping us to sustain the margin profile?

So that will be my first question, sir.